Lihir Gold Ltd rejects Newcrest proposal

LIHIR Gold Ltd (LGL) has rejected the acquisition proposal from Newcrest Mining Ltd because the proposal “did not adequately recognise the underlying value of LGL”.
According to LGL managing director Graeme Hunt the LGL board directors through careful review and analysis unanimously determined that the underlying value of LGL was not recognised by the proposal and so rejected it.
Mr Hunt said that the directors did recognise the strategic merits of combining the two companies but decided otherwise on their assessment.
In a letter to shareholders dated April 15 by LGL chairman Ross Garnaut, he said the offer price was inadequate, LGL’s share of the proposed combined entity would have been not enough regarding LGL’s pure gold assets, timing was unfavourable to LGL, proposal did not reflect an appropriate sharing of synergies or strategic benefits and together with other factors the premium offered for transfer of control was too low.
He said following the proposal, LGL had now appointed Macquarie Capital Advisers as joint advisers with Greenhill Caliburn to assist in assessing strategic alternatives in order to deliver maximum returns to shareholders.
“We continue to be absolutely focused on maximising value, and we are open to considering any opportunities that will deliver increased returns to shareholders,” Mr Hunt said.
Meanwhile, LGL has increased its full year group production guidance to 1-1.1 million ounces following solid first quarter (March end) output of 230,000oz.